Court No. - 34
Case :- WRIT - A No. - 61161 of 2014 Petitioner :- Ram Prakash Yadav Respondent :- Life Insurance Corporation of India, And 3 Ors Counsel for Petitioner :- Siddharth Khare,Ashok Khare Counsel for Respondent :- Manish Goyal,Suyash Agarwal
Hon'ble Sudhir Agarwal,J. Hon'ble Ifaqat Ali Khan,J.
1. Sri Kamlesh Kumar Yadav holding brief of Sri Siddharth Khare and Sri Suyash Agarwal, learned counsel for respondent-Life Insurance Corporation are present.
2. Petitioner was initially appointed in Life Insurance Corporation as Assistant Administrative Officer on 31.03.1997. On 19.05.2003 he was promoted as Branch Manager Mughalsarai in Varanasi District. Charge sheet dated 30.01.2010 containing 4 charges was served on petitioner. The charges read as under:-
(1). THAT as Drawing and Disbursing Officer of Branch Office, Mughalsarai for the financial year 2003-2004 and 2004-2005, while computing the total income, on which tax at source is deductible, you had allowed deductions of amounts of claims from total income under section 80GGA of Income Tax Act, 1961, whereas it was not within the competence of the Drawing and Disbursing Officer to allow these claims, which an employee can only claim at the time of finalization his/her It returns. This allowance of deduction of claims by you has resulted in under charging of tax, of Rs. 15,25,500.00 as per the details in the Annexure-1.
(2). THAT as a result of your allowing claims made by the employee regarding deductions under section 80GGA. Income Tax Authorities seized the Current Bank Account No. 10122004 of the branch office, Mughalsarai with Union Bank of India and withdrew amount of Rs. 36,51,324.00 as short deduction of tax with interest thereon under section 201 and 201 (1A) of Income Tax Act, 1961.
(3). THAT as a result of your under charging income tax, detailed in Annexure-I, the Income Tax authorities levided penalty on the Drawing and Disbursing Officer, Branch Office, Mughalsarai equal to the amount of short deduction of tax for the financial year 2003-2004 and 2004-2005. Thus, your action has resulted in financial loss of Rs. 15,25,500.00 and interest there on.
(4). THAT you claimed rebate for a sum of Rs. 40,000.00 under Section 80GGA of Income Tax Act during Financial year 2003-2004. As per circulars of Central Board of Direct Taxes for the financial year 2003-2004 and 2004-2005, exemptions under section 80GGA are not allowed from salary for tax deducted at source. The employee can claim the same only at the time of finalization of his/her Income Tax returns.
Thus your act of allowing rebate under section 80GGA at source, while computing the total income and assessment of income tax for the financial year 2003-2004 and 2004-2005 to employees of the Mughalsarai BO and you as detailed in the Annexure-I, have tarnished the image of the Corporation as a tax complaint and vigilant organization.
By your aforesaid acts, you have failed to maintain absolute integrity and devotion to duty, failed to serve the Corporation honestly and faithfully, and have knowingly acted in a manner detrimental to the interest of the Corporation which caused a financial loss of Rs./ 15,25,500.00 to the Corporation and interest there on. Thus you have violated the provisions of Regulations 21 and 24 read with Regulation 39 (1) of the aforesaid (Staff) Regulations, 1960, for which any one or more of the penalties specified under Regulation 39 (1) (a) to (g) can be imposed on you.
3. Inquiry was made on the aforesaid charges Inquiry Officer submitted report dated 18.06.2010 holding charges 1 and 4, partly proved, and charges 2 and 3, not proved. Thereafter, objections to inquiry report were filed by petitioner on 15.07.2010. Disciplinary Authority issued a show cause notice to petitioner against imposition of penalty and thereafter imposed penalty of reduction in basic pay by two stages in time scale applicable to petitioner under Regularization 39 (1) (d) of 1960. Order for recovery of Rs. 15,25,500/- was also passed. Appeal against punishment order dated 13.05.2011 was dismissed by Managing Director (respondent 4). Petitioner went further his appeal/revision before Chairman against order of Appellate Authority. Vide order dated 18.12.2013, Chairman (respondent 1) also rejected memorial dated 09.07.2012 filed by petitioner.
4. It is pertinent to mention here that with regard to allegations of under-charging of tax permitting deductions of amount from total income under Section 80-GGA of Income Tax 1961 (hereinafter referred to as “1961”), matter was brought before this court in Writ Tax Nos. 619 of 2009, 620 of 2009 and 621 of 2009 which were allowed and deductions were found rightly made. Court in judgment dated 17.12.2013, passed in Writ Tax No. 620 of 2009 Drawing & Disbursement Officer, LIC of India Vs. Assistant Commissioner of Income Tax (T.D.S.) and Others, along with two other connected cases, hold as under:-
“The petitioner has made bona fide allowance of the donation made by the employees for rural development programme while making deduction of tax at source and as such there was no occasion of any order under Section 201 read with Section 201 (1A) of the Act. It may be pertinent to note that the employer while making deduction of tax at source is only required to have a broad picture of the estimated income on which tax is to be deducted. He is not supposed to calculate the income minutely to precession.
5. It is contended on behalf of petitioner that a wrong exemption from Income Tax cannot be said to deliberate act constituting 'misconduct'. At the best even if, there is a mistake in calculation or otherwise, that can be said to be an error of judgment but cannot be treated a 'misconduct', justifying disciplinary authority & punishment.
6. We find substance in aforesaid submission advanced by learned counsel for petitioner.
7. 'Misconduct' has been defined in Black's Law Dictionary, Sixth Edition at page 999:
"A transgression of some established and definite rule of action a forbidden act, a dereliction from duty, unlawful behavior, wilful in character, improper or wrong behavior, its synonyms are misdemeanor, misdeed, misbehavior, delinquency, impropriety, mismanagement, offence, but not negligence or carelessness."
8. 'Misconduct in Office' has been defined as:
"Any unlawful behavior by a public officer in relation to the duties of his office, wilful in character. Term embraces acts which the office holder had no right to perform, acts performed improperly and failure to act in the face of an affirmative duty to act."
9. P. Ramanatha Aiyar's Law Lexicon, Reprint Edition 1987 at page 821 defines ''misconduct' thus:
"The term misconduct implies a wrongful intention, and not a mere error of judgment. Misconduct is not necessarily the same thing as conduct involving moral turpitude. The word misconduct is a relative term, and has to be construed with reference to the subject matter and the context wherein the term occurs, having regard to the scope of the Act or statute which is being construed. Misconduct literally means wrong conduct or improper conduct. In usual parlance, misconduct means a transgression of some established and definite rule of action, where no discretion is left, except what necessity may demand and carelessness, negligence and unskilfulness are transgressions of some established, but indefinite, rule of action, where some discretion is necessarily left to the actor. Misconduct is a violation of definite law; carelessness or abuse of discretion under an indefinite law. Misconduct is a forbidden act; carelessness, a forbidden quality of an act, and is necessarily indefinite. Misconduct in office may be defined as unlawful behaviour or neglect by a public officer, by which the rights of a party have been affected."
10. Meaning of 'misconduct' came up for consideration before Apex Court in Union of India Vs. J. Ahmed, AIR 1979 SC 1022, wherein, explaining the term 'misconduct' Court held as under:
"It would be appropriate at this stage to ascertain what generally constitutes misconduct, especially in the contest of disciplinary proceedings entailing penalty." (para 10) "Code of conduct as set out in the Conduct Rules clearly indicates the conduct expected of a member of the service. It would follow that that conduct which is blameworthy for the Government servant in the context of Conduct Rules would be misconduct. If a servant conducts himself in a way inconsistent with due and faithful discharge of his duty in service, it is misconduct (see Pearce v. Foster) (1988) 17 QBD 536 (at p.542). A disregard of an essential condition of the contract of service may constitute misconduct [see Laws v. London Chronicle (Indicator Newspaper)]. (1959) 1 WLR 698. This view was adopted in Shardaprasad Onkarprasad Tiwari v. Divisional Supdt., Central Railway, Nagpur Divn., Nagpur, 61 Bom LR 1596: (AIR 1961 Bom 150) and Satubha K. Vaghela v. Moosa RazaF, (1969) 10 Guj LR 23. The High Court has noted the definition of misconduct in Stroud's Judicial Dictionary which runs as under: -
"Misconduct means, misconduct arising from ill motive; act of negligence, errors of judgment, or innocent mistake, do not constitute such misconduct." In industrial jurisprudence amongst others, habitual or gross negligence constitute misconduct but in Management, Utkal Machinery Ltd. v. Workmen, Miss Shanti Patnaik, (1966) 2 SCR 434: (AIR 1966 SC 1051), in the absence of standing orders governing the employee's undertaking, unsatisfactory work was treated as misconduct in the context of discharge being assailed as punitive. In S. Govinda Menon v. Union of India, (1967) 2 SCR 566: (AIR 1967 SC 1274), the manner in which a member of the service discharged his quasi judicial function disclosing abuse of power was treated as constituting misconduct for initiating disciplinary proceedings. A single act of omission or error of judgment would ordinarily not constitute misconduct though if such error or omission results in serious or atrocious consequences the same may amount to misconduct as was held by this Court in P.H. Kalyani v. Air France, Calcutta, (1964) 2 SCR 104: (AIR 1963 SC 1756), wherein it was found that the two mistakes committed by the employee while checking the load-sheets and balance charts would involve possible accident to the aircraft and possible loss of human life and, therefore, the negligence in work in the context of serious consequences was treated as misconduct. It is, however, difficult to believe that lack of efficiency or attainment of highest standards in discharge of duty attached to public office would ipso facto constitute misconduct. There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence. Leaving aside the classic example of the sentry who sleeps at his post and allows the enemy to slip through, there are other more familiar (examples) instances of which (are) a railway cabinman signalling in a train on the same track where there is a stationary train causing headlong collision; a nurse giving intraveious injection which ought to be given intramuscular causing instantaneous death; a pilot overlooking an instrument showing snag in engine and the aircraft crashing causing heavy loss of life. Misplaced sympathy can be a great evil (see Navinchandra Shakerchand Shah v. Manager, Ahmedabad Co.-op. Department Stores Ltd., (1978) 19 Guj LR 108 at p.120). But in any case, failure to attain the highest standard of efficiency in performance of duty permitting an inference of negligence would not constitute misconduct nor for the purpose of Rule 3 of the Conduct Rules as would indicate lack of devotion to duty." (para 11)
11. Again in State of Punjab and others vs. Ram Singh Ex- Constable, (1992) 4 SCC 54 Court has held as under: -
"Thus it could be seen that the word ''misconduct' though not capable of precise definition, on reflection receives its connotation from the context, the delinquency in its performance and its effect on the discipline and the nature of the duty. It may involve moral turpitude, it must be improper or wrong behaviour; unlawful behaviour, wilful in character; forbidden act, a transgression of established and definite rule of action or code of conduct but not mere error of judgment, carelessness or negligence in performance of the duty; the act complained of bears forbidden quality or character. Its ambit has to be construed with reference to the subject matter and the context wherein the term occurs, regard being had to the scope of the statute and the public purpose it seeks to serve. The police service is a disciplined service and it requires to maintain strict discipline. Laxity in this behalf erodes discipline in the service causing serious effect in the maintenance of law and order." (para 6)
12. In the context of Section 31 of Advocates Act, 1961, Apex Court in Noratanmal Chouraria Vs. M.R. Murli & another 2004 (5) SCC 689 said:
"Misconduct, inter alia, envisages breach of discipline, although it would not be possible to lay down exhaustively as to what would constitute conduct and indiscipline, which, however, is wide enough to include wrongful omission or commission whether done of omitted to be done intentionally or unintentionally. It means, "improper behaviour, intentional wrongdoing or deliberate violation of a rule or standard of behaviour".
Misconduct is said to be a transgression of some established and definite rule of action, where no discretion is left except what necessity may demand, it is a violation of definite law."
13. In Baldev Singh Gandhi Vs. State of Punjab & others AIR 2002 SC 1124, with reference to provisions of Punjab Municipal Act, the Apex Court, considering term 'misconduct' held as under :
" 'Misconduct' has not been defined in the Act. The word 'misconduct' is antithesis of the word 'conduct.' Thus, ordinarily the expression 'misconduct' means wrong or improper conduct, unlawful behaviour, misfeasance, wrong conduct, misdemeanour etc."
14. Coming to the facts of present case, in view of proposition laid down in above mentioned authorities, we are of the considered view that charges leveled against petitioner could at the best, constitute an error in computing Income Tax by granting exemption under Act 1961 but not a misconduct. When confronted with question as to how the charges levelled against petitioner would constitute misconduct, Sri Suyash Agarwal appearing for Life Insurance Corporation could not explain and admitted the fact that in the circumstances of the case and in the light of judgment of this Court passed in Writ Tax No. 620 of 2009, no charge of “misconduct” could have been levelled against petitioner.
15. Even otherwise, we find that this Court in Writ Tax No. 620 of 2009 while considering the question of donation made by employees by Rular Development Programme and making deduction of tax at source, has found in its judgment dated 17.12.2013 that act of petitioner in discharge of his functions as Drawing Disbursing Authority was bona fide in as much as he is not supported to calculate income with minutes precision. This finding of Court also makes it clear that there was no evidence of deliberate or intentional error on the part of petitioner. Thus question of treating computation of income for the purpose of tax deduction at source which has been constituted as charge against petitioner, so as to justify disciplinary action and award punishment, by no stretch of imagination arise. Learned counsel for respondent Corporation when confronted, could not dispute that judgment of this Court also makes it clear that allegations leveled against petitioner cannot sustain when the error is bona fide and cannot be construed as “misconduct.”
16. In this view of the matter, impugned punishment order as well as Appellate Order and the order passed by Chairman cannot be sustained.
17. The writ petition therefore, succeeds and is allowed. Impugned orders dated 13.05.2011, 26.03.2012 and 18.12.2013 are hereby quashed.
18. Petitioner shall be entitled to all the consequential benefits.
Order Date :- 30.5.2018/Vikram